To deliver the four economic development outputs underlined by the government in the course of the 13th Five Year Plan (FYP), three national programmes will be implemented viz-a-viz Economic Transformation, Twenty-first Century Skilling, and Ecological Diversity and Resilience. All three programmes will leverage ICTs and will have components under the Digital Transformation Programme spearheaded by the GovTech Agency. The Governance Transformation Programme spearheaded by the Governance Cluster will be another key enabler across all programmes.
The Economic Transformation Programme (ETP) will be largely driven by the Economic Cluster comprising the Ministry of Industries, Commerce and Employment (MoICE), the Ministry of Energy and Natural Resources (MoENR), the Ministry of Infrastructure and Transport (MoIT), the Ministry of Agriculture and Livestock (MoAL), and related agencies and stakeholders. A total outlay of Nu 80,000 million (M) is allocated to this programme to implement close to 76 projects. This programme aims to foster sustainable and inclusive economic growth by employing three key strategies: facilitating private sector development and participation, investing in strategic infrastructure and investing in traditional growth drivers as well as new sources of growth.
The 13th FYP will promote a conducive ecosystem that increasingly accommodates a greater role for private initiatives and allows diverse professions and activities to thrive. By promoting a “government-facilitated and private sector-led” growth model, the private sector will be made the “engine of growth” that Bhutan has aspired to for a long time. To create a more efficient and business-friendly environment, and to improve Bhutan’s investment climate, regulations will be streamlined, simplified and eliminated based on a comprehensive review of existing policies.
The Economic Development Board (EDB) will carry out necessary reforms in the economic and public sectors to debottleneck investment constraints, address policy conflicts pertaining to businesses, coordinate stakeholders, and monitor the delivery and performance of key players. The EDB will be empowered and adequately resourced, for effective fundraising and promotion of investment and business over the long-term. Government will also create a dedicated ‘one-stop service delivery point’ for all public services and businesses.
A robust entrepreneurship culture is critical for economy-wide innovation and productivity, and sustained economic growth. To support entrepreneurship and job creation, the government will establish new, and improve existing start-up centres to incubate and nurture innovators and special talents. Manufacturing industries including cottage and small industries will be promoted with the development of dry ports and industrial parks.
Reforms in business licensing and the tax framework will be undertaken to allow specialization or a focus on specific activities rather than businesses being importer, supplier and manufacturer all at once. Currently, without an industry license, entrepreneurs are unable to be part of the industry supply chain as taxes are levied for the import of goods that are part of the supply chain. Efforts will be made to improve access to finance, particularly for smaller businesses. This will include the design of financial incentives, credit schemes and investment engagement programmes – complemented by fostering financial literacy.
The overall financial ecosystem will be enhanced through regulatory reforms that promote capital markets and ensure seamless coordination among different actors. The listing of companies will be encouraged to help deepen the capital market, and to provide an alternative investment avenue for the general public.
While acknowledging the significant contribution of SOEs in economic activities and budget revenue, the government will encourage the gradual privatization of those SOEs that could be operated more efficiently by the private sector. Wherever feasible, government services will be outsourced to the private sector, including the construction and operation of facilities such as dry ports and industrial parks. PPPs will be pursued to enable the utilisation of private sector resources, expertise and innovation towards the provision of critical public infrastructure and services, with shared risks. A business-friendly policy and regulatory climate, where innovation and privatization will thrive, will be ensured.
In addition to hydropower and social infrastructure such as schools and hospitals, investments will be made in the consolidation and improvement of roads, bridges, airports and railway links along the southern belt – primarily to enhance connectivity, logistics and trade. The government will also establish and operationalize dry ports at Pasakha, Gelephu and Nganglam. The ongoing development of industrial parks at Samtse, Thimphu, Samdrup Jongkhar and Phuentsholing will be expedited. Spatial planning will be reoriented to promote balanced development and enhance efficiency and sustainability. This will entail developing regions that link two or more urban areas to create centres for social services, markets and economic activities. The livability, safety and sustainability of human settlements will be enhanced by the creation of the National Capital Region (NCR) spanning across Thimphu and Paro, several Linked Urban Centres (LUC) spanning across the Phuentsholing-Samtse, Trongsa-Bumthang, Mongar-Trashigang and Samdrup Jongkhar-Nganglam regions, and the implementation of the Punakha-Wangduephodrang Regional Plan.
Infrastructure development will also take place in areas falling outside the NCR and LUCs in Dzongkhag Urban Centres.
To achieve the 13th FYP’s ambitious growth targets, investments will continue to be made in traditional growth drivers as well as in new sources of growth. A range of interventions will be undertaken in the nine focus areas.
Agriculture and livestock:
The agricultural sector will undergo a transformation in the 13th FYP to enhance food and nutrition security, elevate farmers’ income and increase the sector’s contribution to GDP. This will be pursued through the establishment and expansion of large-scale commercial farming, in collaboration with SOEs including the Bhutan Livestock Development Corporation (BLDC), the Farm Machinery Corporation Limited (FMCL) and the Food Corporation of Bhutan Limited (FCBL), and youth and private sector partnerships.
Tourism:
Tourism will continue to be prioritized as a vital growth sector, and a significant source of foreign currency and gainful employment. Guided by the high-value, low-volume tourism policy and the ‘Bhutan Believe’ national brand, the following initiatives will be pursued in the 13th FYP.
Tourism will be promoted as a catalyst for sustainable development, generating economic opportunities while preserving Bhutan’s cultural and natural heritage. This will be pursued through enhancing service standards, strengthening data and intelligence and capacity development. Special attention will be given to promoting tourism in Dzongkhags with fewer or no tourist arrivals, and to promote yearlong tourist arrival in Bhutan.
As part of tourism product development and promoting Bhutan as a tourism destination, the production of international films and documentaries on culture, environment, lifestyle and Bhutanese arts and tradition will be supported. Efforts will also be doubled to professionalize tourism services by improving the quality and efficiency of visa, accommodation, transport, information and roadside amenities services.
Hydropower:
Investments in this renewable energy source will be accelerated towards enhancing energy security and to support the development of domestic industries and the diversification of the economy. The completion of ongoing hydropower projects and initiation of new projects will be complemented by the development of energy storage systems and other related infrastructure components. In addition to prioritizing the completion of the Punatsangchhu-I (1,200 MW) and Punatsangchhu-II (1,020 MW) hydropower projects, the government will initiate new and large hydropower projects in the 13th FYP.
Alternative renewable energy:
Alternative renewable energy sources such as solar, wind, geothermal and biomass will be leveraged, to contribute to the energy mix and enhance energy security. Priority will be given to the development of solar and wind energy sources.
Mining:
Only about 40 percent of Bhutan has been geologically mapped and prospected at the 1:50,000 scale. The government will pursue comprehensive geological and mineral resource mapping through nationwide magnetic, gravity, geochemical and metallic surveys; develop graphite deposits; enhance export and value addition of minerals; develop capacity to professionally manage the mining industry.
Manufacturing:
Production will be enhanced by attracting foreign direct investment, revamping and up scaling the Start-Up Centre, and through PPPs. Market expansion will be undertaken through improved market linkages and establishment, and improved logistics infrastructure including the exploration and development of new modes of transportation. Financing support will include grants and/or low-cost credit for start-ups, new product development, and up scaling, and tapping into capital markets for financing.
Construction:
The construction sector will be modernized to improve its overall efficiency and attractiveness as a viable employment sector for the national workforce. The sector will be professionalized to improve construction quality, with incorporation of international best practices and technological innovations suitable to Bhutan’s landscape and environment.
Niche services Investment:
Niche services are geared towards bolstering areas of services and other industries that draw on Bhutan’s spiritual, cultural and environmental wealth and its status as a peaceful country. Efforts will be made to leverage local culture and traditional knowledge for cultural enterprises and assets. Bhutan’s potential in herbal-based natural remedies and medicines and zorig chusum arts and craft products, among others will be explored as niche products.
Bhutan will be promoted as a destination for holistic education, training and health services. This will involve the establishment of international campuses in Bhutan, provision of spiritual education and training, and courses focusing on conservation and climate change. It will also include the provision of health services that integrate traditional medicine, astrology services, and mental health services. Promoting Bhutan as a destination for niche services requires regulatory reforms and infrastructure development for the service sector but other reforms as well, such as to immigration and labour permits to facilitate the movement of people.
Digital and creative economy:
The digital and creative economy will be developed and enhanced as a viable economic sector with key characteristics, such as being based on efficient e-commerce trading platforms operating globally; the successful engagement of profit-making digital and creative entrepreneurs, and Artificial Intelligence (AI) service-based enterprises; and the protection and commercialization of innovative and creative works including traditional arts and crafts. Investments in enabling infrastructure for the creative industry will be made to do this.
By Tashi Namgyal, Thimphu
